Limited Inc. is a Canadian controlled private corporation. For the fiscal year ending December 31, 2020, its Net Income For Tax Purposes of $475,000 is made up of active business income of $360,000 and $115,000 of Adjusted Aggregate Investment Income. For 2019, the company's Adjusted Aggregate Investment Income was $84,000. Its only deduction in the determination of 2020 Taxable Income is a non-capital loss carry forward of $75,000. Because of its association with another company, Limited's share of the annual business limit is $375,000. The associated company has no Adjusted Aggregate Investment Income for 2019 and 2020.
Determine Limited's small business deduction for the year ending December 31, 2020, assuming that the combined Taxable Capital Employed In Canada of Limited and its associated company was:
Case 1 - $11,000,000 for 2020 and $14,500,000 for 2019.
Case 2 - $13,500,000 for 2020 and $10,800,000 for 2019.

Question

Quizplus · Accepted Answer

The Answer of Limited Inc. is a Canadian controlled private corporation. For the fiscal year ending December 31, 2020, its Net Income For Tax Purposes of $475,000 is made up of active business income of $360,000 and $115,000 of Adjusted Aggregate Investment Income. For 2019, the company's Adjusted Aggregate Investment Income was $84,000. Its only deduction in the determination of 2020 Taxable Income is a non-capital loss carry forward of $75,000. Because of its association with another company, Limited's share of the annual business limit is $375,000. The associated company has no Adjusted Aggregate Investment Income for 2019 and 2020. Determine Limited's small business deduction for the year ending December 31, 2020, assuming that the combined Taxable Capital Employed In Canada of Limited and its associated company was: Case 1 - $11,000,000 for 2020 and $14,500,000 for 2019. Case 2 - $13,500,000 for 2020 and $10,800,000 for 2019.